When college student-athletes are paid for their academic performance or NIL -- name, image, and likeness -- usage, there can be tax implications for them and for the colleges and universities they attend.

Understanding the rules regarding student-athlete income is crucial when it comes to taxes.

In 2020 the NCAA changed its rules to allow schools to pay their student-athletes up to $5,980 for their academic performance. That was overruled by the Supreme Court decision in the NCAA vs. Alston case where the court rule that NCAA cannot apply a limit.

In addition, in some states, student-athletes are now allowed to receive NIL income. These payments may come from making guest appearances at clubs, schools, autograph signings, and exhibitions, as well as from sponsorships, endorsements, and other sources. Compensation may be in the form of cash or non-cash products such as clothing, shoes or other items that the student-athlete has endorsed, or gift cards. Generally, the student-athlete receiving NIL income will be treated as an independent contractor (i.e., self-employed) and should receive Forms 1099-NEC or possibly 1099-K reporting these payments.

As with any other taxpayer, a return must be filed if the athlete makes at least $400 of self-employment earnings in the tax year or has gross income above the filing requirement. The standard deduction ($12,950 in 2022) also applies, so athletes earning less than that amount will not owe federal income tax.